With the Sales Closing Deadline approaching, I have been asked several questions regarding the different crop insurance plans and how they work. More specifically, the Enhanced Coverage Option (ECO) and Supplemental Coverage Option (SCO) endorsement. Both endorsements provide coverage for a portion of the deductible of an insured underlying crop insurance policy. These endorsements must be with the same Approved Insurance Provider (AIP) and are continuous. If an insured wants to cancel, this must be done so by the applicable sales closing deadline.

The Insured is not required to have both SCO and ECO; they can elect to have one or both. However, they are required to have an underlying crop insurance policy. These endorsements protect against widespread loss of yield or revenue in the insured area due to natural causes.

Individual farm yields and revenues are not considered under this endorsement when determining the final area yield and final area revenue.

• It is possible that your farm may experience reduced revenue or reduced yields and you will not receive an indemnity under these endorsements.

• No indemnity will be due on an acreage that is determined damaged solely by causes not insured by the underlying crop insurance policy.

Different insureds in the same county could have different liability amounts and loss payments because an ECO indemnity is based on the policyholder's APH, but the county triggers for a loss and the loss percentage would be the same for everyone in that county. Changes that are made to the underlying policy may also affect these endorsements. Changes to the practice and type/total acres, late planting, added land, coverage levels, etc.

Enhanced Coverage Option (ECO)

Provides area-based coverage for a portion of your underlying crop insurance policy deductible and is purchased as an endorsement to the MPCI policy. ECO provides shallow loss coverage for a portion of the expected crop value with percentage loss trigger levels. If you choose a Yield Protection or a yield-based policy, then ECO covers yield loss. If you choose a Revenue Protection policy, the ECO covers revenue losses. Therefore, this endorsement follows the underlying MPCI policy.

ECO pays losses on an area basis, and the claim payment is triggered when there is a decrease in the county-level yield or revenue. ECO has two different trigger levels of 90 and 95%, if the county yield or revenue is reduced over the trigger, an ECO indemnity will be owed to the policyholder.

Premium depends on the crop, county, coverage level, and plan. Base price and volatility factors can also affect the overall premium cost. Please consult with a crop insurance agent for a coverage quote if you are interested in more information regarding this product.

Supplemental Coverage Option (SCO)

This crop insurance option provides coverage for a portion of your underlying crop insurance policy deductible. You must include this as an endorsement of your underlying MPCI policy for insurability access. This must be done by the applicable sales closing deadline and with the same insurance company.

Any crop on a farm that you elect to participate in the Agriculture Risk Coverage (ARC) program from the 2014 Farm Bill, is NOT eligible for SCO coverage. If you elect SCO and ARC for the same crop on a farm, the SCO coverage will be canceled. However, the underlying policy will still be in effect.

Product Summary Overview

• SCO and ECO endorsements provide area-based coverage on an underlying federal crop insurance policy.

• The endorsements are available for YP, RP, RP-HPE, Yield-based Dollar Amount of Insurance, and APH plans of insurance.

• The list of crop availability for an SCO Endorsement can be found on the RMA website or by speaking with your crop insurance agent.

• ECO is available in most counties where the eligible crops are available.

• The SCO protection covers the underlying policy’s coverage level up to 86% of the area-based yield or revenue.

• The ECO protection has a coverage level from 86% to either 90% or 95% of the area-based yield or revenue.

• The indemnity payment is calculated if there is a loss in the yield or revenue after the Federal Crop Insurance Corporation (FCIC) releases the final yield and revenue amounts.

Sources:
https://www.rma.usda.gov/en/Fact-Sheets/National-Fact-Sheets/Enhanced-Coverage-Option
https://www.rma.usda.gov/en/News-Room/Spotlights/Supplemental-Coverage-Option
Crop Insurance Update 2024 Agent Training – IA, December 2023 Participant Guide 2024 Crop Year